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Editorial Dept

Editorial Dept

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Global Energy Advisory 7th July 2017

Doha

Is Qatar openly defying Saudi Arabia? It may look that way from Riyadh’s point of view …

Qatar Petroleum is raising its LNG production capacity by almost 30 million tons annually, the company said amid the rift between the tiny emirate and four of its neighbors, led by Saudi Arabia.

Qatar is currently the top LNG exporter globally and is facing growing competition from Australia as well as from hopefuls such as the U.S. and Russia, whose LNG export industry is young but ambitious. This increase in Qatar’s capacity, to come from more drilling in the North Field, will help it cement its position, achieved not least because of its low production costs.

The LNG market is currently saturated and prices are depressed. Yet demand for what many call a bridge fuel between oil and renewables is set for a steady increase over the long term, so a capacity increase certainly makes sense for a low-cost producer such as Qatar, which, after the expansion, will be able to produce 100 million tons of LNG annually. That about 40 percent of last year’s global supply, up from its current level of 77 million tons.

Politically, the move could be interpreted as open defiance to Saudi Arabia, the UAE, Egypt, and Bahrain, which tried to force Qatar to sever its ties with Iran and distance itself from Turkey, alleging the emirate funds terrorist groups.

Qatar has done nothing of the sort, with its Foreign Minister noting that the 13 demands the Saudi-led group presented…




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